Hard Money For Auction Properties?

Question

Good Day Peeps:  Market is extremely tight here in Snohomish County, WA.  As I cruise Redfin and all the other websites with the same information I realize that I am only looking at what every other investor has passed over.  I do the Cash to Cash analysis and nothing is even coming close to worth the risk or hassle.  Seems their still may be some good deals on Auction.com. But they all require cash, has anyone had any luck using a hard money lender at an auction?  Without being able to see the inside of the home?  I would imagine it is next to impossible to get cash for something like this.

Saravanan Saravanan · Answer

@Brian Buckingham

There are lots of good feedbacks.

Usually the county tax auction and properties sold at county; are the ones that need same day funding.  Those are difficult with HML. If you have Line of credit set up; then that can be option to use for these deals.

For regular properties like auction (dot) com and other sources; you have 30 to 45 days to close.  The seller gives a covenant deed in most cases with title policy or with option to buy title policy. There are lenders who funds these deals; when you can do higher down payments like 25% to 30% of the deal.

Some times they offer 60% of purchase price at closingand release 20% of purchase after inspection is complete (after closing).

Good luck.

Bob Woelfel · Answer

Auction.com has "online" auctions where you can use private and hard money.  It's ran similar to courthouse auctions where most of the time you can't get access to the property as often they have tenants, but those auctions can close 30-45 days out.  The challenge with hard money is most lenders will want to get inside and do an appraisal.  The only caveat to that is if you have a significant track record with the lender and they trust your abilities and numbers.

Caleb Jordan · Answer

I've helped clients with HML loans at other auction sites, so I know it can be done with certain auctions, never seen one from auction.com though.

If you want to use hard money and  you do find an auction site that works for you make sure to make the offer with your LLC as buyer, since HML needs to close in a bussiness entity. A lot of auction sites don't let you change from personal name to LLC.

Brian Buckingham · Answer

Sounds like I would just need a partner with some cash!!!

Joseph A. · Answer

@Roman M. It will take 30-45 days according to their website.

Brian Buckingham · Answer

Thanks for all the info!!!

Andy Bartley · Answer

@Brian Buckingham

Agree with the previous posts - there is no black and white answer because hard money resides outside of the traditional finance system. Relationships and track record matter when working with hard money. You typically get their “standard rules” until you’ve proven you know how to execute and have reduced risk for them. After that, they can be as creative as they want.

Jose R Torres · Answer

@Brian Buckingham Markets are thigh everywhere because you have so many people looking for the same discounted deals. I tried your approach of looking for deals on auction platforms. Now remember that Auction. com is not the only one, check these other auctions platforms:

1. Xome

2.Hudson and Marshall

3. Hubzu

When looking for auction deals you must use all of them to bid on properties in your area. They all have a credit card requirement to bid on these properties. But, once you win your bidding the you will have about 25 to 30 days to close. There are hard money companies that will lend you the money to purchase auction properties if you can provide proof of your rehabbing experience.  Other hard money lenders will require just pictures of the interior of the property. You just must start creating relationships with local private and hard money lenders in your area, and let them know what you want to do. I just recently spoke with a national hard money lender representative that explained me about this lending program aimed at experience investors (Lending Home) -check them out online, I did not qualify because I had never rehab a property...my experience is wholesaling auction properties. But, the answer you are looking for is Yes, hard money lenders will lend you the money to purchase auction properties, you must create a relationship with these lenders before you go ahead and win a property at a auction. I hope this helps!!!

Jose

Jose R Torres · Answer

@Roman M. Usually it takes about 25 to 30 days.

Darin L. · Answer

You have to show the auctioneer your cashiers check when yiu check-in before the auction. So the thought is to get the big loan into an account a few days before auction then turn that into a cashiers check to go to the auction. If i dont buy anything (scheduled auctions often get delayed or cancelled) i payoff the loan early. No prepayment and no loan fees according to websites.

I will finish my apps with a couple of the companies this weekend to see what happens and how much cash i can put togrther and associated fees/etc to see if it will really work.

Hard Money For Auction Properties?

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